At the core of the Japan problem is the need to lift potential, efficiency and productivity in an economy that has a shrinking population and workforce. Migration is seen as central to overall reform efforts because it offers a way towards socioeconomic rejuvenation and effective participation in the global economy.
The world’s third largest economy is showing signs of recovery and reversing a 15-year deflationary trend as a result of its unconventional use of monetary policy, dubbed Abenomics, according to an annual government report published on Tuesday.
In its July report, the Cabinet Office said Japan’s economy “started to pick up from the beginning of 2013 and there are some indications it is turning around from its prolonged deflation.”
The Japanese economy has undergone difficult times in recent years, though a recent government stimulus package appears to be reinvigorating the economy. In 2008 and 2009, the economy shrank by 1.042 percent and 5.527 percent respectively – as a result of the global financial crisis – whereas it shrank by 0.569 percent in 2011 due to the tsunami disaster.
The International Monetary Fund on Friday gave its full backing to Japan’s use of ‘Abenomics’, adding that it is “beginning to work”, but warned of significant downside risks to the world’s third largest economy if it does not rein in its huge government debt.
Based on the latest data, Abenomics appears to be, for the moment at least, achieving its stated objectives. Yet for its recent success, Abenomics only addresses the symptoms, and not the real cause, of Japan’s long-term problems.
Co-authored with my Tokyo-based colleague Masashi Murata:
Inspired by recent efforts by Japanese Prime Minister Shinzo Abe to lift the economy, the Japanese division of lingerie maker Triumph International on Wednesday unveiled a special edition bra, dubbed the “Branomics Bra” after “Abenomics”, which promises to give a “boost” to women.
Weeks into Japan’s paradigm shift in economic policy, optimism that the country may end a quarter-century of economic stagnation is balanced by fears that the authorities’ new approach may make things worse. And, while debate naturally focuses on Japan’s internal manoeuvres, the tipping point may lie abroad.
Since 2000, Japan has managed to offset its shrinking labour force with increased worker productivity – at a rate higher than most other advanced economies. But, Japan’s productivity gains are soon reaching its limits and the nation must once again find new solutions to maintain economic progress amidst the world’s fastest aging population.
International Monetary Fund managing director Christine Lagarde on Sunday said the radical $1.4 trillion stimulus from the Bank of Japan would not only boost investor confidence in the world’s third largest economy, but would also support the world economy that she said has improved from a year ago.
The Bank of Japan stunned investors on Thursday when it announced plans to dramatically expand the country’s monetary supply, as it tries to stimulate growth and end two decades of stagnation.
Despite persistent deflation and tepid economic growth, things are looking up for Japan under the new Prime Minister. Shinzo Abe’s Keynesian-inspired reform programme is essentially a replay of what Takahashi Korekiyo achieved in the 1930s, when Japan escaped the Great Depression with a triple-barrelled blast of monetary, fiscal and structural stimulus.
TOKYO – Japanese Prime Minister Shinzo Abe’s programme for his country’s economic recovery has led to a surge in domestic confidence. But to what extent can “Abenomics” claim credit?
